The Agent, the Broker, and You — (Part 2, Indications and Quotes)

Last week we discussed the difference between a broker and an agent — this week, we discuss another distinction that could save you money…

A price is not a firm price unless it’s called a quote. A ‘quote’ is an offer to provide insurance coverage at a specific price, for a narrow set of conditions. To get a firm ‘quote’ you’ll usually need to specify:

  1. the aircraft (by N-number or serial number);
  2. the pilots who will be flying it (and their levels of experience); and
  3. a time frame during which the quoted price is available to you (usually 30 to 90 days from the date of their quote).

Any other price mentioned by an agent or broker will be an indication. This is basically a guess of what the price might be — given the agent or broker’s experience in similar cases. There is no such thing as a firm indication and any ‘indication’ might be significantly different from a ‘quote’ for any number of reasons. Getting an indication doesn’t even guarantee you’ll be insurable at all, once a specific underwriter gets your complete application. The only time an indication is useful, is when you’re just starting to toy with the idea of owning an airplane and trying to get a rough estimate of costs.

Important: Calling a broker or agent and getting an indication won’t give you enough information for you to be firming up your actual flying budget. What’s more, because it can burn the agent/broker and the airplane owner alike, you’ll find it’s hard to get any idea of a price until you’re in the final stages of buying an airplane. This may truly be a case of ‘if you’re asking, you can’t afford it.’

As we’ve discussed in previous iPilot articles, the number of aviation insurance underwriters is shrinking. Even when there are thousands of agents and brokers ready to take your application, there are only about six or seven actual underwriters. It’s a small world, and in that world there are some rules that seem a little strange to people outside of the ‘system.’ One of these perceived oddities is that an underwriter will generally provide only one quote on a combination of pilot and airplane — and will ‘decline’ to quote on any other applications by the same owner.

Translation: If you call one broker and ask him/her to shop around for you, and then call someone else, the first one you called will likely be the only one that provides you a quote. The underwriters will only ‘quote’ the first agent/broker to present them with your application. If they do extend a quote to another agent/broker, it will most likely be the exact same price. Does this mean you’re stuck with the first agent/broker you call, simply because he/she runs the biggest ad in the magazines? Generally, yes.

Sure, you can go through a formal process of filing a ‘Broker of Record’ agreement with the insurance company to change from one agent/broker to another; but this will only get you the same quote at the same price from another agent/broker — one you have to specify ahead of time. Unless you want to work with a specific agent or broker, then you are not ahead at all by trying to change once a quote’s been issued.

BOTTOM LINE: Know who you’re talking to, and whether they’re an agent trying to sell you to an insurance company, or a broker trying to sell an insurance company’s policy to you. Once you’re under way, make sure you know whether the price you hear is an indication or a true quote, and if it’s a quote, know under what conditions the quote has been issued. Understanding the agent/broker/client relationship, and the indication/quoting process, is just another part of the exciting world of airplane ownership … really.